Dispute Resolution analysis: a solicitor and publicity and media manager at a large law firm have been found to be in contempt of court following the disclosure of an embargoed judgment to members of the press prior to being handed down. The contempt enquiry itself was found to have provided a significant learning experience for the deeply apologetic individuals and no further punishment was imposed. Written by Phillip Patterson, barrister, Gatehouse Chambers.

Commercial analysis: Partially successful claim following trial brought against a well-known manufacturer of luxury cars by its exclusive distributor in the Middle Eastern, North Africa and Turkish (‘MENA’) region. The parties had entered into an agency agreement which the distributor had terminated upon alleged breaches of payment obligations. The claim also included numerous allegations of breaches of good faith. The court found that the claimant had been entitled to terminate the agency agreement for non-payment. Written by Alexander Whatley, barrister at 3PB Chambers.

This Practice Note considers the unique contractual status of the articles of association between the company and its members, primarily under section 33(1) of the Companies Act 2006 (CA 2006). Various breaches of the articles are considered, with reference to the ability of the majority of members to ratify a breach in certain circumstances, or otherwise take appropriate action against the board or an individual director. Claims brought by a minority shareholder are discussed, particularly personal actions for alleged breaches of ‘membership rights’ arising under the constitutional contract. Reference is also briefly made to derivative actions, unfair prejudice claims and winding-up. What is the company’s constitution Unless the context otherwise requires, a company’s constitution is defined under CA 2006 to include: • the company’s articles of association, and • any resolutions and agreements affecting a company’s constitution Before 1 October 2009, the memorandum of association was an integral part of a company’s constitution, but its constitutional significance has been greatly reduced by CA 2006. However any provisions that were contained in the memorandum of a company

A term in a lease that permits the lease to be brought to an end.

This Practice Note explains, in the context of both residential and business leases, what a break clause is, when it may be exercised (including interpretation of common deadlines for when to serve a break notice and the meaning of ‘year’, ‘month’ and ‘corresponding date rule’) and the form of a break notice. It covers case law in respect of errors in compliance with break notice requirements, in particular the reasonable recipient test under Mannai, and its application to common types of error. It covers the application of Mannai to service of statutory notices and the different types of error that are commonly made, namely completion errors and form errors. It also considers what happens when a mistake in a break notice is spotted (including serving another notice without prejudice to the validity of the first and/or arguments that validity issues have been waived), and whether or not a break notice can be withdrawn or waived and the effects of withdrawal or waiver, including the potential loss of covenants. It also covers compliance

This Practice Note covers by and upon which party a break notice must be served, the method of service (ie permissive or mandatory contractual provisions, statutory regimes for service of notices and deeming provisions under section 196 of the Law of Property Act 1925 (LPA 1925), section 23 of the Landlord and Tenant Act 1927 (LTA 1927), section 7 of the Interpretation Act 1978 (IA 1978), and common law rules). It also looks at the interaction between break notices and statutory security of tenure under the Housing Act 1988 and the Landlord and Tenant Act 1954 (LTA 1954). For more information in respect of when a break may be exercised, case law in respect of compliance with break notice requirements, in particular the reasonable recipient test under Mannai Investment v Eagle Star Life Assurance, and what happens when a mistake in a break notice is spotted, whether or not a break notice can be withdrawn or waived, and compliance with conditions precedent (pre-conditions), see Practice Note: Break clauses and notices—exercising breaks and conditions precedent. Who

ARCHIVED: This precedent has been archived and is not maintained. Definitions (General) Competent Authority • any authority having jurisdiction in relation to the Property, its occupation or use; Restricted Period • any period [exceeding [number] [continuous] weeks] during the Term in which a Pandemic Restriction applies; Pandemic Restriction • any Legislation, or any requirement of, or guidance published by, a Competent Authority which: (a) arises out of [COVID-19 or the occurrence of any other OR any] national or local pandemic disease; and (b) prohibits, prevents or restricts the Tenant from [fully] [trading

Break fees are generally designed to compensate a party’s legal and professional costs which it may have incurred in due diligence and negotiations at the time the transaction terminates. They may also encourage the parties to remain at the negotiating table rather than take action that may unreasonably cause the transaction not to proceed.

A fee paid by an offeree to an offeror if the offer does not proceed in certain circumstances, to compensate the offeror for its fees and expenses in connection with the making of the offer. Before September 2011, the Code placed safeguards on the payment of break fees, including that the amount be de minimis (normally no more than 1% of the value of the offeree). Rule 21.2 now prohibits the offeree and its concert parties from entering into any offer-related arrangement (broadly defined as 'any agreement, arrangement or commitment in connection with an offer') with the offeror or its concert parties, including a break fee (unless the Panel consents to the arrangement, because there is a 'white knight' situation or a formal sale process has been initiated by the offeree).

These are generally designed to compensate one party’s legal and professional costs which it may have incurred in due diligence and negotiations at the time the share purchase/asset purchase transaction terminates. The most common type of break fee is where the target agrees to pay a fee to the bidder if a specified event occurs, which results in the transaction not completing (eg if the seller accepts a higher offer from a third party or any required shareholder approval is not obtained). Break fee provisions (also known as inducement, termination or broken deal fees) may be contained in a separate agreement (entered into early on in the sale transaction, usually before the buyer commences due diligence) or may be included in heads of terms. In the UK, break fees are outlawed by the City Code on Takeovers and Mergers in the case of UK public targets and the Listing Rules in the UK impose limits on such fees in the case of premium listed issuers.

This Practice Note considers the prohibition on break fees and other deal protection measures (or ‘offer-related arrangements’) under Rule 21.2 of the City Code on Takeovers and Mergers (Code) and the application of Rule 21.2 to schemes of arrangement as established by Appendix 7. Exemptions from the general prohibition are considered, as are circumstances in which dispensations may be granted by the Takeover Panel (Panel), such as those in relation to competing offers or a formal sale process. Background—Takeover Panel consultations Since 11 September 2011 the Code has generally prohibited break fees and other deal protection measures in public takeovers, subject to some specific exceptions. The prohibition was introduced in response to the Panel’s concerns that the increasing use of inducement fee arrangements and other deal protection measures was discouraging potential competing offerors and leaving offeree boards with limited room to facilitate or recommend a competing offer. Rule 21.2—general prohibition on offer-related arrangements Rule 21.2 states that, except with the consent of the Panel, neither the offeree nor any person acting in

The nature and purpose of break fees Break fees are generally designed to compensate one party’s legal and professional costs which it may have incurred in due diligence and negotiations at the time the transaction terminates. They may also encourage the parties to remain at the negotiating table rather than take action that may unreasonably cause the transaction not to proceed. A break fee agreement will be signed by the parties early on in the sale transaction, usually before the buyer commences its due diligence. Break fee provisions (also known as inducement, termination or broken deal fees) may be contained in a separate agreement or may be included in heads of terms. Types of break fees The most common type of break fee is where the target agrees to pay a fee to the bidder if a specified event occurs, which results in the transaction not completing (for example, if the seller accepts a higher offer from a third party or any required shareholder approval is not obtained). A substantial shareholder of the target may also agree to